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Business planning to survive 2021 and beyond

Business planning to survive 2021 and beyond
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Business planning to survive 2021 and beyond
Bill Humphreys by Bill Humphreys
Director - Libra Wealth Management

The coronavirus crisis has created a health and economic crisis like never before. As the government initiated a raft of unprecedented business support packages, business owners focused on adapting operations and immediate survival strategies. But as we ease out of lockdown, it’s time to look further ahead to ensure the long-term survival of our companies, advises Bill Humphreys of Libra Wealth Management

Covid-19: a unique business challenge

There’s never been an economic crisis quite like this one; never before has the country, quite literally, closed shop overnight. With such a dramatic, immediate change in the business landscape, it was natural for our collective focus to have been on the short term: Can I keep my business operational? How can I transition my staff to working from home? How is my immediate cashflow affected? Do I need to furlough my staff? What help is available? Will we survive?

The government response showed the depth of the challenge for the country, businesses and individuals, and many business owners have gratefully taken advantage of the various government grants available, the VAT holiday, the personal tax holiday, business loan holidays and business bounce back loans .

Time for business owners to plan for the medium term

Without the government’s emergency measures there undoubtedly would have been many more immediate business casualties.  But the challenge for business owners now is to lift our gaze from the day to day and look to the medium term if we want to ensure that, having survived the immediate challenge, we don’t become a statistic in the next wave of business casualties.

It’s no longer true that there’s no such thing as a free lunch. Some of the government’s business support measures, such as the Small Business Rates Relief grant, have been in the form of catch-all grants, given to all qualifying businesses, regardless of the impact of the coronavirus lockdown on their turnover, costs and profitability. Some, such as support for furloughed staff available under the Job Retention Scheme and the coronavirus Self-Employment Income Support Scheme , have been available for all businesses or sole traders who have been able to demonstrate a negative impact from coronavirus, and do not require repaying.

But many of the financial lifelines that have been thrown to SMEs will be called in; they are loans that will have to be repaid or deferred payments that will have to be made good. And this has the potential to be the undoing of many businesses next year.

Double tax bills in 2021

Many of the payment holidays that were made available to SMEs will be called in early next year, creating double tax bills for the businesses, business owners and sole traders that have taken advantage of them.  For example, if you deferred your VAT payment that was due between 20 March and 20 June 2020, you will have to pay it by 31 March 2021 ; but you will also have your most recent quarter’s VAT bill to pay. 

Similarly, if you have opted to defer your second self-assessment personal tax payment on account from the normal deadline of 31 July 2020, you will be liable to pay it by 31 January 2021. Up until this deadline you will not incur any interest or penalties, but HMRC will be expecting you to settle up at the end of January, as well as paying any tax that is due in January 2021 from your 2019-20 personal tax return.

Why financial planning for 2021 needs to start now

If you have deferred payments from this year, you need to plan now to ensure that you will have sufficient cash reserves to pay a double whammy next year.  Similarly, if you have taken on any additional business debt, you will need to have robust financial forecasting to ensure you can meet the payments when they become due.  

But what if your business typically experiences a downturn in January and February, or it’s seasonal and has little or no income in the first two months of the year? This makes financial planning now even more important; if you know you will have reduced – or no – income in January and February, you need to be saving throughout the remainder of 2020 to ensure you will have sufficient reserves to meet all your financial obligations in the first quarter of 2021, or be making payments on account to clear the debts while your cashflow enables you to do so.

Expert help to ensure your business survival

If you’re a florist, estate agent, osteopath, lawyer, decorator, hairdresser… you’re probably brilliant at what you do, but crunching numbers and financial forecasting may not be your strong point.  If that’s the case, it’s vital to take advantage of the many tools available to help you create a robust financial plan to make sure your business is in a viable position going into 2021:

  • Online accountancy software: Packages such as Quickbooks and Xero are designed to help SMEs understand their numbers and get the financial insights they need to forecast successfully.
  • HMRC: The government is operating a Covid-19 business helpline ; the advisers will be able to talk through your business’s financial situation and create a repayment schedule to help you clear your tax bills in an affordable way.
  • Talk to your bank/loan provider: Don’t wait for debts to become overdue! Most creditors appreciate proactive discussions and will work with you to find a plan to enable you to repay your debt sustainably – after all, it’s not in their interests for you to go out of business.
  • Professional advice: Accountants are here for situations like this (as well as to help you through the good times!). Talk to other business owners to find a personally recommended accountant who can work with you to help you achieve business survival – and future success!

If you’ve got your business through the immediate shock of lockdown, you deserve a hearty pat on the back. But canny business owners will now be looking at the road ahead and taking proactive steps to ensure their company has robust plans to meet all the financial obligations that will become due next year.


Bill Humphreys  is the director of Libra Wealth Management , chartered accountants and business advisers based at Kings Hill Capital Space Business Centre , who specialise in helping family and local businesses plan for success and preserve their wealth through efficient tax planning.